What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-05-10 compared with 2020-11-16 · 64 added, 131 removed, 159 unchanged (55% of the section changed)

4 unchanged sentences

Legacy Housing Corporation builds, sells and finances manufactured homes and “tiny houses” that are distributed through a network of independent retailers and company-owned stores and are sold directly to manufactured housing communities.

We are the fourth largest producer of manufactured homes in the United States as ranked by number of homes manufactured based on information available from the Manufactured Housing Institute and IBTS for the fourth quarter of 2019.

We are the fifth largest producer of manufactured homes in the United States as ranked by number of homes manufactured based on information available from the Manufactured Housing Institute and IBTS for the fourth quarter of 2020.

With current operations focused primarily in the southern United States, we offer our customers an array of quality homes ranging in size from approximately 390 to 2,667 square feet consisting of 1 to 5 bedrooms, with 1 to 3 1 / 2 bathrooms.

Our homes range in price, at retail, from approximately $22,000 to $140,000.

For the three and nine months ended September 30, 2020, we sold 961 and 2,866 home sections, respectively (which are entire homes or single floors that are combined to create complete homes).

For the three and nine months ended September 30, 2019, we sold 968 and 2,914 home sections, respectively.

For the three months ended March 31, 2021, we sold 720 home sections (which are entire homes or single floors that are combined to create complete homes) and for the three months ended March 31, 2020, we sold 849 home sections.

The Company has one reportable segment.

12 unchanged sentences

Our 13 company-owned retail locations, including 11 Heritage Housing stores and two Tiny House Outlet stores exclusively sell our homes.

For the nine months ended September 30, 2020, approximately 45% of our manufactured homes were sold in Texas, followed by 11% in Michigan, 7% in Georgia, 5% in Kansas, 5% in North Carolina, and 5% in Kentucky.

For the nine months ended September 30, 2019, approximately 43% of our manufactured homes were sold in Texas, followed by 12% in Oklahoma, 7% in Alabama, 7% in Georgia, and 5% in Tennessee.

For the three months ended March 31, 2021, approximately 49% of our manufactured homes were sold in Texas, followed by 11% in Georgia, 8% in Alabama, 6% in Louisiana and 5% in Kansas.

For the three months ended March 31, 2020, approximately 47% of our manufactured homes were sold in Texas, followed by 10% in Kentucky, 9% in North Carolina, 8% in Georgia, and 5% in Kansas.

We plan to deepen our distribution channel by using cash from operations and borrowings from our lines of credit to expand our company-owned retail locations in new and existing markets.

19 unchanged sentences

Each retail center requires between $500,000 and $1,500,000 to acquire the location, situate an office, provide inventory, and provide the initial working capital.

We initially anticipated opening 2 to 4 additional retail centers by the end of 2020, but we will reassess those plans once we have a clearer understanding of the COVID-19 pandemic’s impact on the retail business.

We initially anticipated opening 2 to 4 additional retail centers by the end of 2020, but we delayed those plans due to the COVID-19 pandemic’s impact on the retail business.We expect to open 1 to 2 additional retail centers by the end of 2021.

● We have purchased several properties in our market area for the purpose of developing manufactured housing communities and subdivisions.

As of September 30, 2020, these properties include the following:

As of March 31, 2021, these properties include the following (dollars in 000’s):

Date of Acquisition

5 unchanged sentences

Johnson County, Texas

Wise County, Texas

September 2020

Bexar County, Texas

February 2021

● We also expect to provide financing solutions to a select group of our manufactured housing community-owner customers in a manner that includes developing new sites for products in or near urban locations where there is a shortage of sites to place our products.

1 unchanged sentence

● Finally, our financial performance will be impacted by our ability to fulfill current orders for our manufactured homes from dealers and customers.

Currently, our two Texas manufacturing facilities are operating at near peak capacity, with limited ability to increase the volume of homes produced at those plants.

Currently, our two Texas manufacturing facilities are

operating at near peak capacity, with limited ability to increase the volume of homes produced at those plants.

Our Georgia manufacturing facility has unutilized square footage available and with additional investment can add capacity to increase the number of homes that can be manufactured.

We intend to increase production at the Georgia facility over time, particularly in response to orders increasingly being generated from new markets in Florida and the Carolinas.

In order to maintain our growth, we will need to

be able to continue to properly estimate anticipated future volumes when making commitments regarding the level of business that we will seek and accept, the mix of products that we intend to manufacture, the timing of production schedules and the levels and utilization of inventory, equipment and personnel.

In order to maintain our growth, we will need to be able to continue to properly estimate anticipated future volumes when making commitments regarding the level of business that we will seek and accept, the mix of products that we intend to manufacture, the timing of production schedules and the levels and utilization of inventory, equipment and personnel.

● The coronavirus pandemic is an evolving threat to the economy and all businesses.

3 unchanged sentences

o reduced sales volume as potential customers are unable to shop for new homes or cannot qualify for a home purchase, retail dealers or company stores reduce or stop operations, or MHP owners reduce their future home purchases;

o reduced production resulting from factors such as the spread of the illness through the Company’s workforce, reduced product demand, or government-mandated closures of our factories, company-owned stores, or retail lots of independent dealers who carry our products;

o reduced production resulting from factors such as the spread of the illness through the Company’s workforce or the impact of government interventions on labor force participation, reduced product demand, or government-mandated closures of our factories, company-owned stores, or retail lots of independent dealers who carry our products;

o delays in development projects as zoning, regulatory, and permitting decisions are likely to be postponed and the expected negative impact of the pandemic on the construction industry;

4 unchanged sentences

At this time, we believe that the pandemic will have a negative effect on our financial results that could range from minor to material.

Management has taken a number of actions in recent months, including stimulating demand by offering discounts and modified purchase terms, reducing production labor, suspending overtime, and reducing rates of pay for non-production workers.

Additionally, the Company negotiated a new credit agreement with its primary bank that expanded and extended our credit facility.

The new credit agreement closed on March 30, 2020.

Results of Operations

The following discussion should be read in conjunction with the information set forth in the financial statements and the accompanying notes appearing elsewhere in this Form 10-Q.

Comparison of Three Months ended September 30, 2020 and 2019 (in thousands)

Comparison of Three Months ended March 31, 2021 and 2020 (in thousands)

Three months ended

September 30,

Product sales

14 unchanged sentences

Product sales primarily consist of direct sales, commercial sales, consignment sales and retail store sales.

Product sales decreased $1.2 million, or 3.4%, during the three months ended September 30, 2020 as compared to the same period in 2019.

This change was driven by an increase in commercial sales, consignment sales and other product sales offset by a decline in direct sales and retail store sales.

Consignment sales increased $0.4 million to $12.0 million in 2020 from $11.6 million in 2019, commercial sales increased $0.8 million to $17.7 million in 2020 from $16.9 million in 2019 and our company-owned retail stores sales increased $1.0 million to $3.9 million in 2020 from $3.0 million in 2019.

This increase was partially offset by a net $1.2 million decrease in direct sales to $1.5 million in 2020 from $2.6 million in 2019.

Other product sales increased $0.2 million to $1.5 million in 2020 from $1.3 million in 2019 and is primarily due to an increase in parts sales and miscellaneous sales income.

Product sales increased $1.1 million, or 3.5%, during the three months ended March 31, 2021 as compared to the same period in 2020.

This increase, though broad based, was muted by the week-long closure of our Texas-based factories due to a February weather event.

The disruption from the weather event contributed to an increase in ending finished goods inventory as our transportation schedule was disrupted, similar to our Texas-based factories.

Net revenue attributable to our factory-built housing consisted of the following during the three months of 2021 and 2020:

Three months ended

September 30,

(in thousands)

2 unchanged sentences

Net revenue per product sold

For the three months ended September 30, 2020, our net revenue per product sold increased because of changes in our product sales mix.

We had increases in consignment sales and sales to manufactured home communities partially offset by declines in direct sales and company-owned retail store sales.

Sales through our company-owned retail stores and sales to manufactured home communities have higher margins than our direct sales and consignment sales.

In addition, there was a price increase to our product prices in the third quarter of 2020 due to rising material and labor costs, which resulted in higher home sales prices and more revenue generated per home sold.

Consumer and MHP loans interest income grew $0.7 million, or 13.0%, during the three months ended September 30, 2020 as compared to the same period in 2019 and is related to our increase in outstanding MHP Note portfolio and consumer loan portfolio.

Between September 30, 2019 and September 30, 2020 our MHP Note portfolio increased by $46.4 million and the consumer loan portfolio increased by $5.5 million.

Other revenue primarily consists of service fees and consignment fees.

Other revenue decreased $0.1 million or 16.1% during the three months ended September 30, 2020 as compared to the same period in 2019 and is primarily due to a $0.1 million decrease in consignment fees revenue.

The cost of product sales increased $0.3 million, or 1.2%, during the three months ended September 30, 2020 as compared to the same period in 2019.

The increase in costs is primarily related to increases in the cost of materials and labor in 2020.

Selling, general and administrative expenses decreased $1.8 million, or 28.1%, during the three months ended September 30, 2020 as compared to the same period in 2019.

This decrease was primarily due to a $0.4 million decrease in warranty costs, a $0.3 million decrease in delivery costs, a $0.1 million decrease in salaries and incentive costs, a $0.4 decrease in loan loss reserve, a $0.3 million decrease in insurance expense, a $0.1 million decrease in consulting and professional fees and a net $0.2 million decrease in other miscellaneous costs.

For the three months ended March 31, 2021, our net revenue per product sold increased because of price increases in the first quarter of 2021 due to rising material and labor costs.

We had increases in consignment sales, direct sales and company-owned retail store sales partially offset by a decline in sales to manufactured home communities.

MHP loans interest income grew $0.2 million, or 9.7%, during the three months ended March 31, 2021 as compared to the same period in 2020 and is related to our increase in outstanding MHP Note portfolio.

Between March 31, 2021 and March 31, 2020 our MHP Note portfolio increased by $35.0 million.

Consumer loan interest was $4.1 million for the three months ended March 31, 2021 and 2020.

Other revenue primarily consists of consignment fees, commercial lease rents, and service fees.

Other revenue increased $0.4 million or 57.2% during the three months ended March 31, 2021 as compared to the same period in 2020 and is primarily due to continued growth in our commercial lease revenue.

The cost of product sales increased $2.2 million, or 9.9%, during the three months ended March 31, 2021 as compared to the same period in 2020.

The increase in costs is primarily related to increases in the cost of materials and labor in 2021 and was materially passed along to our end-customer.

Selling, general and administrative expenses decreased $0.8 million, or 14.6%, during the three months ended March 31, 2021 as compared to the same period in 2020.

This decrease was primarily due to a $0.8 million decrease in warranty costs, a $0.4 decrease in loan losses, a $0.2 million decrease in legal expense and a $0.2 million decrease in advertising and promotions.

These decreases were partially offset by a $0.3 million increase in consulting and professional fees, a $0.3 million increase in salaries and incentive costs and a net $0.2 million increase in other miscellaneous costs.

In addition, dealer incentive expense increased $0.3 million in 2021 as compared to 2020.

Other income (expense), net increased $0.1 million during the three months ended September 30, 2020 as compared to the same period in 2019.

This increase was primarily due to an increase of $0.1 million in non-operating interest income and an increase of $0.1 million in miscellaneous, net partially offset by a $0.1 million increase in interest expense.

Income tax expense during the three months ended September 30, 2020 was $2.5 million compared to $1.9 million for the same period in 2019.

The effective tax rate for the three months ended September 30, 2020 was 22.7% and differs from the federal statutory rate of 21% primarily due to state income taxes.

The effective tax rate for the three months ended September 30, 2019 was 23.6% and differs from the federal statutory rate of 21% primarily due to state income taxes.

Comparison of Nine Months ended September 30, 2020 and 2019 (in thousands)

Nine months ended

September 30,

Product sales

Consumer and MHP loans interest

Total net revenue

Operating expenses:

Cost of product sales

Selling, general administrative expenses

Dealer incentive

Income from operations

Other income (expense)

Non‑operating interest income

Miscellaneous, net

Gain on settlement, net

Interest expense

Income before income tax expense

Income tax expense

Product sales increased $0.3 million, or 0.3%, during the nine months ended September 30, 2020 as compared to the same period in 2019.

This change was driven by an increase in commercial sales and retail store sales offset by a decline in direct sales, consignment sales and other product sales.

Commercial sales increased $7.6 million to $54.5 million in 2020 from $47.0 million in 2019 and our company-owned retail stores sales increased $0.2 million to $11.5 million in 2020 from $11.3 million in 2019.

This increase was partially offset by a net $2.3 million decrease in consignment sales to $29.9 million in 2020 from $32.2 million in 2019, a $5.1 million decrease in direct sales to $7.5 million in 2020 from $12.6 million in 2019.

Other product sales decreased $.01 million to $3.5 million in 2020 from $3.6 million in 2019 and is primarily due to a decrease in parts sales and miscellaneous sales income.

Net revenue attributable to our factory-built housing consisted of the following during the nine months of 2020 and 2019:

Nine Months Ended

September 30,

(in thousands)

Products sold

Total products sold

Net revenue per product sold

For the nine months ended September 30, 2020, our net revenue per product sold remained flat.

We had declines in direct sales and consignment sales offset by increases in sales to manufactured home communities and company-owned retail stores.

Sales through our company-owned retail stores and sales to manufactured home communities have higher margins than our direct sales and consignment sales.

Consumer and MHP loans interest income grew $2.6 million, or 15.9%, during the nine months ended September 30, 2020 as compared to the same period in 2019 and is related to our increase in outstanding MHP Note portfolio and consumer loan portfolio.

Between September 30, 2020 and September 30, 2019 our MHP Note portfolio increased by $46.4 million and the consumer loan portfolio increased by $5.5 million.

Other revenue primarily consists of service fees and consignment fees.

Other revenue decreased $0.5 million or 18.4% during the nine months ended September 30, 2020 as compared to the same period in 2019 due to a $0.2 million decrease in service fee revenue, $0.2 million decrease in other income and a $0.1 decrease in consignment fees revenue.

The cost of product sales increased $1.1 million, or 1.5%, during the nine months ended September 30, 2020 as compared to the same period in 2019.

The increase in costs is primarily related to the increasing number of home units sold and increases in the cost of materials and labor in 2020.

Selling, general and administrative expenses decreased $4.7 million, or 25.0%, during the nine months ended September 30, 2020 as compared to the same period in 2019.

This decrease was primarily due to $1.2 million of retail store expenses recorded as SG&A in the first quarter of 2019 that were subsequently recorded in cost of sales later in 2019, a $1.1 million decrease in warranty costs, a $0.4 million decrease in advertising and promotions, a $0.7 decrease in loan loss reserve, a $0.4 million decrease in consulting and professional fees, a $0.2 million decrease in salaries and incentive costs, a $0.2 million expense in the first quarter of 2019 for settlement of a lawsuit and a net $0.4 million decrease in other miscellaneous costs.

In addition, dealer incentive expense increased $0.4 million, or 74.0% in 2020 as compared to 2019.

Other income (expense), net increased $1.3 million during the nine months ended September 30, 2020 as compared to the same period in 2019.

This increase was primarily due to a $1.1 million gain due to the settlement of a lawsuit with a previous vendor for the Company, an increase of $0.5 million in non-operating interest income and an increase of $0.1 million in miscellaneous, net income offset by a $0.3 million increase in interest expense.

Income tax expense during the nine months ended September 30, 2020 was $8.1 million compared to $6.7 million for the same period in 2019.

The effective tax rate for the nine months ended September 30, 2020 was 22.7% and differs from the federal statutory rate of 21% primarily due to state income taxes.

The effective tax rate for the nine months ended September 30, 2019 was 23.3% and differs from the federal statutory rate of 21% primarily due to state income taxes.

Other income (expense), net decreased $0.8 million during the three months ended March 31, 2021 as compared to the same period in 2020.

This decrease was primarily due to a $1.1 million gain associated with the 2020 settlement of a lawsuit with a previous vendor for the Company, partially offset by an increase of $0.2 million in miscellaneous, net and a $0.1 million decrease in interest expense.

Income tax expense during the three months ended March 31, 2021 was $1.9 million compared to $2.6 million for the same period in 2020.

The effective tax rate for the three months ended March 31, 2021 was 17.1% and differs from the federal statutory rate of 21% primarily due to a federal tax credit for energy efficient construction partially offset by state income taxes.

The effective tax rate for the three months ended March 31, 2020 was 22.3% and differs from the federal statutory rate of 21% primarily due to state income taxes.

Liquidity and Capital Resources

3 unchanged sentences

We have not incurred any losses from such accounts and management considers the risk of loss to be minimal.

We believe that cash flow from operations, cash and cash equivalents at September 30, 2020, and availability on our lines of credit will be sufficient to fund our operations and provide for growth for the next 12 to 18 months and into the foreseeable future.

As of September 30, 2020, we had approximately $1.6 million in cash and cash equivalents, compared to $1.7 million as of December 31, 2019.

We negotiated a new credit agreement with our primary bank that expanded and extended our credit facility.

We believe that cash flow from operations, cash and cash equivalents at March 31, 2021, and availability on our lines of credit will be sufficient to fund our operations and provide for growth for the next 12 to 18 months and into the foreseeable future.

As of March 31, 2021, we had approximately $2.4 million in cash and cash equivalents, compared to $0.8 million as of December 31, 2020.

In the first quarter of 2020, we negotiated a new credit agreement with our primary bank that expanded and extended our credit facility.

The new credit agreement closed on March 30, 2020.

Cash Flow Activities

Nine Months Ended

September 30,

Three Months Ended

(in thousands)

Net cash provided by (used in) operating activities

Net cash used in operating activities

Net cash used in investing activities

3 unchanged sentences

Cash and cash equivalents at end of period

Comparison of Cash Flow Activities from September 30, 2020 to September 30, 2019

Net cash provided by operating activities decreased $11.4 million during the nine months ended September 30, 2020, compared to the comparable period in 2019, primarily as a result of increased volume of loan originations supporting sales to MHPs net of principal collections, increased growth in growth in consumer loan originations net of principal collections, decreased payables and increased accounts receivable.

The decrease in operating cash flows described above was partially offset by cash generated by operating income before non-cash adjustments, increased accrued expenses, reduced prepaid expenses and reduced inventory.

Net cash used in investing activities of $3.8 million in 2020 was primarily attributable to $2.2 million used for the acquisition of property plant and equipment, $0.3 million used to purchase consumer loans and $5.4 million used for loans to third parties for the development of manufactured housing parks.

Comparison of Cash Flow Activities from March 31, 2021 to March 31, 2020

Net cash used in operating activities decreased $2.8 million during the three months ended March 31, 2021, compared to the comparable period in 2020, primarily as a result of decreased volume of loan originations supporting sales to MHPs net of principal collections and lower growth in net working capital.

The decrease in cash used in operating activities was partially offset by increased growth in consumer loan originations net of principal collections.

Net cash used in investing activities of $6.1 million in 2021 was primarily attributable to $1.7 million used for the acquisition of property plant and equipment and $5.7 million used for loans to third parties for the development of manufactured housing parks.

These were offset by collections of $0.1 million of loans we made to third parties for the development of manufactured housing parks and collections of $1.2 million from our purchased consumer loans.

Net cash provided by financing activities of $12.0 million in 2020 was primarily attributable to net proceeds of $12.7 million on our lines of credit and $0.8 million increase in escrow deposits received by the company offset by $1.4 million for purchase of treasury stock.

Net cash provided by financing activities of $9.5 million in 2021 was primarily attributable to net proceeds of $9.2 million on our lines of credit and $0.3 million increase in escrow deposits received by the company.

Capital One Revolver.

4 unchanged sentences

The New Revolver has a maximum credit limit of $70,000,000 and a maturity date of March 30, 2024.

For the period January 1, 2020 through March 30, 2020 and for the year ended December 31, 2019, Revolver 1 accrued interest at one-month LIBOR plus 2.40%.

The interest rate in effect as of December 31, 2019 was 4.09%.

For the period January 1, 2020 through March 30, 2020, Revolver 1 accrued interest at one-month LIBOR plus 2.40%.

Amounts available under Revolver 1 were subject to a formula based on eligible consumer loans and MHP Notes and were secured by all accounts receivable and the consumer loans receivable and MHP Notes.

The amount of available credit under Revolver 1 was $16,140,000 as of December 31, 2019.

The New Revolver accrues interest at one-month LIBOR plus 2.00%.

The interest rate in effect as of September 30, 2020 was 2.16%.

As with Revolver 1, amounts available under the New Revolver are subject to a formula based on eligible consumer loans and MHP Notes and are secured by all accounts receivable and the consumer loans receivable and MHP Notes.

The amount of available credit under the New Revolver was $26,180,000 as of September 30, 2020.

The interest rate in effect as of March 31, 2021 was 2.11%.

and MHP Notes.

The amount of available credit under the New Revolver was $24,653,000 as of March 31, 2021.

In connection with the New Revolver, we paid certain arrangement fees and other fees of approximately $0.3 million, which were capitalized as unamortized debt issuance costs and will be amortized to interest expense over the life of the New Revolver.

For the nine months ended September 30, 2020 and 2019, interest expense under the Capital One Revolvers was $785,000 and $233,000, respectively.

The outstanding balance as of September 30, 2020 and December 31, 2019 was $43,820,000 and $28,860,000, respectively.

We were in compliance with all financial covenants as of September 30,

2020, including that we maintain a tangible net worth of at least $120,000,000 and that we maintain a ratio of debt to EBITDA of 4-to-1, or less.

For the three months ended March 31, 2021 and 2020, interest expense under the Capital One Revolvers was $226,000 and $320,000, respectively.

The outstanding balance as of March 31, 2021 and December 31, 2020 was $45,347,000 and $36,174,000, respectively.

We were in compliance with all financial covenants as of March 31, 2021, including that we maintain a tangible net worth of at least $120,000,000 and that we maintain a ratio of debt to EBITDA of 4-to-1, or less.

Veritex Community Bank Revolver.

3 unchanged sentences

Amounts available under Revolver 2 are subject to a formula based on eligible inventory.

The interest rates in effect as of March 31, 2020 and December 31, 2019 was 4.17% and 4.19%, respectively.

The interest rates in effect as of March 31, 2020 was 4.17%.

On May 12, 2017, we entered into an agreement to increase the maximum borrowing availability under Revolver 2 to $20,000,000.

On October 15, 2018, Revolver 2 was amended to extend the maturity date from April 4, 2019 to April 4, 2021.

The amount of available credit under Revolver 2 was $12,028,000 and $11,262,000 at March 31, 2020 and December 31, 2019, respectively.

For the nine months ended September 30, 2020 and 2019, interest expense was $17,000 and $111,000, respectively.

The outstanding balance as of March 31, 2020 and December 31, 2019 was $2,001,000.

We were in compliance with all financial covenants as of March 31, 2020, including that we maintain a tangible net worth of at least $80,000,000.

The amount of available credit under Revolver 2 was $12,028,000 at March 31, 2020.

For the three months ended March 31, 2021 interest expense was $21,000.

The outstanding balance as of March 31, 2020 was $2,001,000.

We were in compliance with all required covenants as of March 31, 2020.

In April 2020, this note was paid in full and the facility was terminated.

4 unchanged sentences

On May 1, 2020, this loan was paid in full.

Notes Payable.

We have a promissory note with Woodhaven Bank.

The amount due under the promissory note accrued interest at an annual rate of 3.85% through February 2, 2017 and then at the prime interest rate plus 0.60% through maturity on April 7, 2018.

The loan was subsequently renewed through April 7, 2033.

The promissory note calls for an interest rate of 4.25% and monthly payments of $30,000 with a final payment due at maturity.

The note is secured by certain of our real property.

Interest expense was $113,000 for the nine months ended September 30, 2019.

In October 2019, this note was paid in full.

On May 24, 2016, we signed a promissory note for $515,000 with Eagle One, LLC collateralized by the purchase of real property located in Oklahoma City, Oklahoma.

The amount due under the promissory note accrues interest at an annual rate of 6.00%.

The promissory note calls for monthly principal and interest payments of $6,000 until June 1, 2026.

Interest expense was $1,000 for the nine months ended September 30, 2019.

In January 2019, this note was paid in full.

PILOT Agreement.

5 unchanged sentences

The PILOT agreement is collateralized by the assets of the Project.

As of September 30, 2020, we had not drawn down on this credit facility.

As of March 31, 2021, we had not drawn down on this credit facility.

Contractual Obligations

The following table is a summary of contractual cash obligations as of September 30, 2020:

The following table is a summary of contractual cash obligations as of March 31, 2021:

Payments Due by Period

7 unchanged sentences

Our obligation under this repurchase agreement ceases upon the purchase of the home by the retail customer.

The maximum amount of our contingent obligations under such repurchase agreements was approximately $603,000 and $260,000 as of September 30, 2020 and December 31, 2019, respectively, without reduction for the resale value of the homes.

The maximum amount of our contingent obligations under such repurchase agreements was approximately $3,073,000 and $2,967,000 as of March 31, 2021 and December 31, 2020, respectively, without reduction for the resale value of the homes.

We may be required to honor contingent repurchase obligations in the future and may incur additional expense as a consequence of these repurchase agreements.

We consider our obligations on current contracts to be immaterial and accordingly we have not recorded any reserve for repurchase commitment as of September 30, 2020.

We consider our obligations on current contracts to be immaterial and accordingly we have not recorded any reserve for repurchase commitment as of March 31, 2021.

Critical Accounting Estimates

3 unchanged sentences

Our critical accounting estimates are identified and described in our Annual Report on Form 10-K for the year ended December 31, 2020.

Other than recent accounting pronouncement adoptions discussed in Note 1 of our condensed financial statements, we had no significant changes in those critical accounting estimates since our last annual report.

Subsequent to the filing of our Annual Report, there have been no material changes to our critical accounting estimates.

Recent Accounting Pronouncements

For information regarding recent accounting pronouncements, see Note 1 – Nature of Operations, Recent Accounting Pronouncements to our September 30, 2020 Condensed Financial Statements, included in Part I, Item 1, Financial Statements (Unaudited), of this Quarterly Report.

For information regarding recent accounting pronouncements, see Note 1 – Nature of Operations, Recent Accounting Pronouncements to our March 31, 2021 Condensed Financial Statements, included in Part I, Item 1, Financial Statements (Unaudited), of this Quarterly Report.

Emerging Growth Company Status

6 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis